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Low Tech Disruption in Cost Control

Disruption is the new buzz word in technology. It’s defined as a break or interruption in the normal course or continuation of some activity, process, etc. And guest facing technology is truly revolutionizing how hoteliers operate. It is changing, disrupting, everything from reservations and check in, to f&b ordering and service requests.  But how does disruption and technology affect the back of the house operations like cost control?

The truth is that cost control is and always has been about disruption. The supply chain has several possible points of failure where erroneous costs can be recognized and finalized into the bottom line. By disrupting these points of failure operators have contributed to their operational efficiencies and added dollars directly back to the bottom line. Below are a couple of examples of technological and old school cost control disruption.

Accounting errors make up a significant portion of loss. Incorrect pricing (often in the vendors favor), missing or damaged items, and missed returns all easily sneak onto invoices. If these errors aren’t caught in time, they directly contribute to the operations’ COGS. But reconciling these invoices is a tedious and time-consuming process.

Software exists to automate pricing and help to reconcile invoices easily. Price updating, 3 way matching and financial system interfaces allow inventory control software to streamline the processes and place controls in place to catch errors and limit mistakes. This results in direct cost savings in both spend and time.

Old school cost controllers recognize that there are some easy ways to disrupt the failures in the supply chain without a system in place. For example, instead of automated purchase approvals, controllers can periodically audit open Purchase Orders. Validating purchase quantities, especially of high-ticket items, shows staff a level of interest that discourages lazy over-ordering which increases inventory value on hand/waste. And periodically meeting with vendors to discuss any found discrepancies will demonstrate the same level of vigilance to the supplier.

Similarly, cycle-counts or spot-counts of high-ticket items allow users to reconcile inventory and sales, ensuring the proper product is there for the guest when they require it. While this process too can be automated and supported by software, nothing beats a quick hands-on count to validate inventory and find any issues before the end of the month when it’s locked into the costs.

Finally, everyone knows that cash and liquor should always be closely monitored. Most POS systems will allow you to report on no-sales and voids. Some go as far as integrating security cameras to provide footage of these types of transactions.  Liquor guns can help ensure portion control and recipe management with inventory depletion via sales are all features that technology companies offer to help operators manage these inventories.

Old school cost controllers use some tried and true techniques to combat employee theft, which is one of the leading causes of shrink in any organization. Mid-shift cash drops help to ensure safety in a restaurant by eliminating the temptation of fast cast to a thief. Mid shift cash drops may also disrupt any side accounting by a bartender who is using the cash drawer to shield theft. Re-arranging glassware, napkins and other standard bar items can similarly disrupt schemes used by employees to signal or track unauthorized give a-ways. By literally disrupting routines you can deter the unwanted behavior.

It is true that technology offers some very effective cost control measures, like scheduling cycle count, suggesting re-order quantities, emailing inventory alerts and ensuring approval of POs with contracted pricing. And these systems/features are great, but they must be maintained as well. That’s why true diligence, in systems and technology, continues to be the most effective weapon to disrupting loss leaders and lowering operational costs.

Article provided by Moreton Bay Technology.

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